Brown & Brown, Inc. (BRO) Q2 2015 Earnings Report, Transcript and Summary

Good morning and welcome to the Brown & Brown Incorporated Second Quarter Earnings Call. Today's call is being recorded. Please note that certain information discussed during this call, including information contained in the slide presentation posted in connection with this call, and including answers given in response to your questions may relate to future results and events, or otherwise be forward-looking in nature. Such statements reflect our current views with respect to future events, including those relating to the company's anticipated financial results for the second quarter of 2015, and are intended to fall within the Safe Harbor provisions of the securities laws. Actual results or events in the future are subject to a number of risks and uncertainties, and may differ materially from those currently anticipated, or desired, or referenced in any forward-looking statements made as a result of a number of factors. Such factors include the company's determination as it finalizes its financial results for the second quarter of 2015 that its financial results differ from the current preliminary unaudited numbers set forth in the press release issued yesterday, other factors that the company may not have currently identified or quantified, and those risks and uncertainties identified from time to time in the company's reports filed with the Securities and Exchange Commission. Additional discussion of these and other factors affecting the company's business and prospects, as well as additional information regarding forward-looking statements is contained in the slide presentation posted in connection with this call and the company's filings with the Securities and Exchange Commission. We disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. With that said, I will now turn the conference over to Powell Brown, President and Chief Executive Officer. You may begin. J. Powell Brown - President, Chief Executive Officer & Director: Thank you, Tracy, and good morning everyone and thanks for joining us for our second quarter earnings call. I'm on slide four. We delivered $419.4 million of revenue for the quarter, growing 5.4% in total and 1.9% organically. Each of our four divisions delivered organic growth again this quarter. We continued to see overall economic conditions improve slowly, which is good, however, we, like the entire industry, continued to experience headwinds related to the rate declines. The downward pressure on rates continued to be driven by good overall loss experience, minimal weather related events and a significant amount of excess capital in the market chasing returns. We expect this trend to continue unless there is a material change in one or all of these factors. As we discussed on our previous calls, teammates are our most important asset and we're continuing to make the incremental investments in new revenue producing teammates. This is mainly for producers in Retail, but also includes brokers and Wholesale. These investments impacted our margin this quarter as compared to the second quarter of 2014. We're making these incremental investments as we see the economy continuing to improve, so we can build our team to capitalize on new opportunities. We recognize this approach has some short-term margin compression, but we expect these investments in new revenue producing teammates will deliver additional organic growth and margin expansion in the future. Our GAAP earnings per share were $0.43, growing 2.4% for the quarter. We're pleased to report that our board of directors has approved the purchasing of up to another $400 million of outstanding shares, which is part of our continued disciplined at capital allocation plan. We now have authorization to purchase up to $450 million of our shares with the remaining amount on the previous authorization. As I know everyone will ask, timing of any future share repurchases will be evaluated consistent with our approach to allocating capital to internal investments, acquisitions or returning it to shareholders. Also we've announced our quarterly dividend payment of $0.11 a share. Lastly, during the second quarter of 2015, we acquired four agencies with annual revenues of approximately $19 million. And for the year, we've acquired seven agencies with annualized revenues of approximately $31 million. While there are plenty of deals out there, we continue to see aggressive pricing for acquisitions, and we remain disciplined in what we pay. We believe we can continue to acquire good businesses, if they fit culturally and make sense financially. Slide five provides additional detail on some noteworthy items impacting the market. We continue to see slow economic improvement in some markets and certain areas in the country, but this is not consistent. We see exposure of unit growth in certain regions, but don't see consistent hiring across the board in the middle market. We believe this is partially driven by a lack of qualified – possibly of lack of qualified candidates, but more specifically the implications of ACA adoption that many employers are facing. We're experiencing further uptick in our private exchange offering during the quarter and now have over 4,000 covered lives, but adoption continues to be slow. We continue to see small and medium-sized employers evaluating public exchanges, technology and plan design alternatives in order to manage their healthcare and ancillary costs. Those may include partial self insurance and continuing to move to a per employee per month payment model in order to manage costs as they impalement the Affordable Care Act. Similar to what we've been seeing for a number of quarters, the favorable loss experience, the excess capital in the market and the prolonged period of limited weather events is driving most rates down. We continue to see declining rates for our coastal properties and also seeing admitted property rates trending flat, down 5% in some cases. However, we are seeing commercial auto rates generally trending up, but it really depends on the specific loss experience, and professional liability rates are flat to up 5%. Overall, weather events and the associated claims processing revenue to those events remain at very low levels and well below the 10-year average. Now, with that, let me turn it over to Andy, who'll discuss our financial performance in more detail. R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: Great. Thank you, Powell, and good morning everyone. Let me first discuss our overall financial results and talk about some of the key metrics for the quarter. On slide six, it shows our consolidated results for the quarter. We delivered 5.4% revenue growth and grew organically in all four divisions with a total organic rate of 1.9%. We'll discuss the drivers of this growth by division later in the presentation. Our pre-tax income declined year-over-year by 90 basis points, driven by incremental investments in teammates and the additional interest expense associated with our credit facility and bonds. We'll be on a more comparative basis in the third quarter of this year as it pertains to year-on-year interest cost. We believe EBITDAC is the most appropriate measure for comparing our performance across periods. EBITDAC for the second quarter was $137.8 million compared to $134 million (sic) [$134.8 million] last year, an increase of 2.2%. Our EBITDAC margin decreased by 100 basis points, primarily as a result of our incremental investments in new teammates, which Powell described earlier. We expect margins to experience slight downward pressure year-over-year for the next few quarters due to these incremental investments. Then, as the new teammates begin to produce revenues, profitability will rise. We continue to seek EBITDAC margins in the range of 33% to 35% range over the long term. As we've mentioned before, at times, we might be below this range on a quarterly basis as a result of incremental investments. However, we do not believe a variance outside of this range for a few quarters will impact our margins expectations as we have built a very robust operating model. Our net income decreased by 1.3% in the quarter, which is slightly larger than that of the pre-tax income. This was a result of our effective tax rate increasing a 39.6% for the quarter versus 39.3% in second quarter of last year. The increase in our effective tax rate this year was primarily driven by the State of New York's new consolidated return approach and lower tax credits. At the mid-year point of the year, we're now expecting our overall effective tax rate to be in the range of 39.5% to 39.7% range for the full year. Our earnings per share grew 2.4% and our weighted average number of shares outstanding decreased by 2.2% year-over-year, driven by $175 million of share repurchases over the last 12 months. As a reminder, we initiated a $100 million accelerated share repurchase program during the first quarter of this year and it is now projected to be completed early in the third quarter. In the current environment, we continue to evaluate share purchases as a good use of our cash to drive shareholder returns. Moving to slide seven, I'd like to highlight the key components of our revenue performance for the quarter. Other revenues were down about $1 million year-over-year, driven by a gain on the sale of a book of business last year. This line item will fluctuate each quarter as it is not one that we can project. We did recognize just under a $1 million increase in continuous and guaranteed supplemental commissions, primarily from our Programs division. Both of these basically offset each other from a profitability standpoint. The largest driver of year-on-year growth of commissions and fees was from our net acquisitions, delivering $19.2 million of growth followed by organic growth of $7.4 million. Moving to slide eight, and transitioning from our global view of the company, we'd like to discuss each of our divisions in more detail. We'll start by looking at the Retail Division. Over the last three months, our Retail division has delivered 4% growth, primarily driven by acquisitions during the last 12 months. The organic revenue growth for the quarter is 70 basis points with a year-over-year EBITDAC margin decline of 110 basis points. Similar to the first quarter of this year, there are a number of key items impacting overall growth and profitability, which have continued into the second quarter. First, as we noted in our Q1 call, there has been a change in the State of Washington's regulation related to bona fide associations that resulted in several of our association health plans terminating as they were determined to be non-qualified. The change is continuing to impact our overall revenue growth by 60 basis points in the quarter, and margins by 30 basis points with a revenue loss of $1.2 million in the second quarter. As mentioned previously, we expect there to be about another $1 million revenue impact for each of the remaining quarters of the year and also to have an impact on our margins. Next, our small employee benefit space, which we define as the employers with less than 100 employees, we continue to see these companies to be very focused on managing their costs and trying to understand the implementation complexities of ACA. These factors have and are expected to continue to put downward pressure on our employee benefit revenues. Précising, our small employee benefits business represents about $90 million of total annualized revenues of our total employee benefits business of $250 million. For the quarter, our large employee benefits business grew nicely on an organic basis, while our small group declined. To address this downward pressure, over the past few quarters, we've been analyzing all the complexities of ACA and what our customers need. As a result, in addition to acquiring new employee benefit capabilities through our recent acquisition of strategic benefit advisors, we're also adding employee benefit resources to support our offices and continue to keep our teammates current on the ever-changing landscape related to regulation, compliance and technology. We're planning some modest investment in incremental resources in the second half of this year that will then help facilitate growth and margin expansion of our employee benefit business in 2016. Shifting to property rates, coastal or as we call them cat property renewal rates are continuing to decline 10% to 25% as compared to the second quarter of last year. Last year, we noted that they were down 15% to 20% as compared to 2013. We are seeing consistency with what we experienced in the first quarter of this year. Property renewal rates continue downward for admitted markets and are generally plus 5% to minus 5% versus the prior year. And lastly, we're seeing workers compensation renewal rates varying from plus 5% to minus 5%, depending upon claims history. Let me move to slide nine. Our National Programs revenues grew 10.3%, mainly due to the acquisition of Wright. We continue to see interest from carriers and capital allocators to leverage our underwriting capabilities, technology and broad distribution platform. We believe our expertise and capabilities will enable us to create new programs and help drive additional growth, as we are an ideal partner for a carrier, that wants to deploy capital, but does not want to build the infrastructure. We continue to experience good growth in Arrowhead aftermarket, our lender placed business, and our personal alliance businesses. A lot of this growth was offset by our coastal property facilities, which are experiencing intense downward rate pressure of 10% to 25%, and our California workers' compensation program is being impacted by a change in the risk appetite with our carrier partner. These two programs or businesses had slightly less than a 200 basis point impact on organic revenue growth for programs in the quarter. Lastly, the Programs division EBITDAC margins benefited from the disposal of ICG in the fourth quarter of last year, continued cost discipline management, and scaling our platform. Onto slide 10, our Wholesale division had another really good quarter, reporting revenue growth of 2% and organic growth of 5.1%. This differential is related to the sale of Axiom Re that we completed in the fourth quarter of last year. The binding authority and brokerage businesses, both contributed to the positive results for the quarter and we continue to see growth across most business lines. We are seeing more net new business and we're leveraging our deep carrier relationships to help provide innovative solutions for our customers. Even while facing major downward pressure on coastal property rates in the range of negative 10% to negative 25%, our brokerage business still grew nicely for the second quarter. This is a really impressive performance as it shows the amount of new business the team is writing and retaining each and every month. The Wholesale division delivered EBITDAC margin improvement of 40 basis points. The primary driver of this expansion is due to the sale of Axiom Re in the fourth quarter of last year. Onto slide 11 and our Services division, we delivered impressive organic growth of 7.8% for the quarter. This growth is driven primarily by our social security advocacy claims processing business, that added new clients and our Medicare set-aside processing business that expanded customer relationships. While we realized some revenues related to the recent flooding in the second quarter in Texas, the incremental claims processing revenue versus the prior year was immaterial for the quarter. Our EBITDAC margin declined by 190 basis points for the quarter. The main driver of this decline is some initial on-boarding costs we've experienced associated with new client additions for our social security advocacy business. We expect margins to increase back to historical levels over the next few quarters. Onto slide 12, in the second quarter of 2014, we provided ranges of where we expected Wright to perform in its first fiscal year, which is Q3 of 2014 through the second quarter of 2015. We're pleased with the year-one performance of Wright. We delivered revenues very close to our estimates and earnings per share in line with our estimates even without material weather-related events to drive incremental revenues. As we mentioned in 2014, the original forecast included $7.5 million of revenues for weather events. For reference, this was based upon the 10-year average, but excluded Hurricane Katrina and Superstorm Sandy. In the first year, we only realized about $1 million of cat revenue for Wright. While the cat revenues were down from projections, the team has done an excellent job of managing their cost. We're also pleased with the performance of our National Schools program, our new National Municipal program and our Food program. In summary, we're very pleased with the financial and operational performance and trajectory of the business. We'd like to thank the entire Wright team for their efforts over the last year in producing solid results. With that, let me turn it back over to Powell for closing comments. J. Powell Brown - President, Chief Executive Officer & Director: Thank you, Andy, for great report. In summary, two of our divisions had a good quarter and the other two divisions were below our expectations. However, we can see they are driving the right activities to deliver long-term organic growth and profitability. We remain actively engaged in discussions with many acquisition candidates. And as I've mentioned before, closing an acquisition depends on when the seller is ready and if we can come to an appropriate financial transaction. I can tell you that we continue to be active in this space, but are being prudent and disciplined as pricing and terms continue to be aggressive. Lastly, our disciplined capital deployment strategy across internal investments, acquisitions and returns to shareholders remains a key focus to help us drive long-term shareholder value. In closing, we have some challenges and some opportunities and we're going to meet and seize them. We're energized about the trajectory of where we see growth in our incremental investments and new teammates will position us well for revenue growth and margin expansion in the future. Now, I'd like to turn it back to Tracy for the Q&A section, and if you could just explain the process to everyone on the call.

Yes, thank you. And we'll go first to Kai Pan from Morgan Stanley. Kai Pan - Morgan Stanley & Co. LLC: Good morning. First question is about your employee benefit business. Looks like you're under a little bit pressure from ACA implementation. I just wonder what's your view about the process of implementing ACA for your small accounts. And do you expect that like they will – like move more towards the public exchange? And also related your comments on the recent proposed merger between Willis and Towers Watson, what would that impact your liaison relationship? Thanks. J. Powell Brown - President, Chief Executive Officer & Director: Okay. The first question, relative to ACA, is I believe that many small employers are all over the board in terms of their preparation, some are behind and being – getting ready for next year, some are on their way and some are already there. I do not think that ACA in and of itself is going to expedite more public exchanges as much, I mean that will be part of it, but I do think that private exchanges will be another alternative. The reason I say that about public exchanges is, as you've read in the paper, a number of those exchanges are experiencing rate increases and they will continue to experience rate increases, we believe, because of the unfavorable loss experience many of them have had over the last year due to the number of people in those pools. Having said that, I would reiterate that the private exchange is an option, not the option. And so we believe that it is, one, a technology play; two, a coverage play; three, a compliance play. And you wrap all that up and that is appealing to some smaller businesses. But we are watching very closely as that continues to develop and deploy the appropriate resources to service our clients in that under 100 space. To your second question about Willis and Towers, that's an interesting question. One, the more things change, the more they stay the same. We're constantly in a state of flux in our industry, as you know. Number two, there has been no information that I'm aware of put out on it, but I would assume and we don't assume anything that they will try to keep that separate. And we will obviously be looking for indications and assurances of which to make sure that we have that in our ongoing relationship. We also think that it's going to create some opportunities because there'll be disruption in the marketplace. So we continue to keep our eyes open for new opportunities, and I think that will be one of the many things that will create opportunities in the coming months ahead. Kai Pan - Morgan Stanley & Co. LLC: Okay, that's great. R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: Hey, Kai, it's Andy here. Let me also add to that. I mean one of the things that our employee benefits group does is they are always looking at technology that's out there. So they're going to constantly be evaluating other options, if we ever had something like that occur. Kai Pan - Morgan Stanley & Co. LLC: Okay, that's great. And then follow-up on the buybacks. So just wanted to see if a little bit more detail about it, what's the board's deliberation on the buyback program because you just initiated the first buyback programs not long ago and now run double that buyback amount. Is that a signal that you don't see a lot of acquisition opportunity to grow the business, that buyback is nice, the most attractive way to return to shareholders? And also regarding to the $400 million authorization, how is that related to your free cash flow and to your like a debt levels, the debt to EBITDA levels? J. Powell Brown - President, Chief Executive Officer & Director: Okay. Relative to the first question, I would tell you that you're correct in saying we got a first authorization last year, which was $200 million. And in our discussions with the board, we, as you've heard us talk about before, like to have options and you heard me and Andy speak about before the three areas we try to invest our free cash. One, internally in investment – in teammates to grow the business organically; two, external investments; and three, return to shareholders. So, in our discussions with the board, the idea was that this is an unlimited authorization, so it does not mean that it has to occur in a set period of time. And so, we'll allow us to evaluate share repurchases periodically in the future. And we're going to do it just like we've done that in the past. As you've heard me say earlier, we've done $31 million of acquisitions annually year-to-date, which is on the lower end of what we've done in the past and acquisition terms and conditions are aggressive that does not mean that we're not going to do acquisitions, that means that we're going to be very selective. We also – that means that we are going to seriously consider and we have the authorization to do it, additional repurchases when we think it seems to make sense. Now, Andy, would you like to respond to the second part about the $400 million? R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: Yeah, Kai. So, I think your question was how does the $400 million correlate to our cash flows for the year. As you guys probably have in most of your models, we generate somewhere in the range of about $350 million a year in free cash flow prior to dividends and interest. That gives you an idea where it is. I think the other one was around our debt to EBITDA levels right now, we're just a little over 2 times debt to EBITDA, but I think, as Powell and I have mentioned in the past, we're not one that's just going to go out there and do a leverage buyback, that's not just our approach on things. This is just one of the options that we want to have as an organization for flexibility, when and if we need to deploy our capital in a right way with the goal of trying to make sure that we can drive shareholder returns. Kai Pan - Morgan Stanley & Co. LLC: Thank you very much for all the answers.

And we'll take our next question from Michael Nannizzi from Goldman Sachs. Michael Nannizzi - Goldman Sachs & Co.: Thanks. Just a follow-up and just one follow-up on Kai's question. Is there an expiration on the authorization? R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: There is no authorization on the $400 million. There was an expiration or there is an expiration on the original $200 million, which we have $50 million left, which is the end of this year. Michael Nannizzi - Goldman Sachs & Co.: Got it. And then I thought I remembered the – you guys had an ASR that you announced in March and that it was expected to settle in the second quarter. It doesn't look like that came through. So, is that, Andy, maybe what you're insinuating that that's going to come through in the third quarter? R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: Yeah. So that was the – Michael, that was the $100 million ASR that we did just at beginning of March in the first quarter based upon volume in the marketplace and the purchasing that was being done – that would be done by the end of June. It looks like right now, somewhere around the end of July, maybe the middle of August, all really depends upon volatility that's out there. Michael Nannizzi - Goldman Sachs & Co.: Got it, okay. And then, I mean, is it – I'd guess and just given those parameters of volume, et cetera that it would be unlikely to do more than that in the third quarter. Is there still the ability just given that it's a sort of a pre-arranged transaction that you could also be in the market next to that transaction? R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: It would. Let me say, would we do an overlapping transaction, that would be highly, highly unlikely. Michael Nannizzi - Goldman Sachs & Co.: Okay. R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: Because of the 10b-18 rules that are out there. Michael Nannizzi - Goldman Sachs & Co.: Got it. Great, thanks. And then just maybe, Andy, in Retail, the – can you quantify, is it possible to just get some notion in terms of how much the investments that you made in teammates impacted margins in the second quarter? I think, just to kind of try to get an idea what that headwind was in the second quarter? R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: Yeah, if you look back, our margins were down 110 basis points for the quarter. We mentioned in there that the association health plans out in State of Washington that had an impact of 30 basis points, leaving with us about 80 basis points, a large percentage of that was of our incremental teammates. Michael Nannizzi - Goldman Sachs & Co.: Got it, got it. And then the – when I look back at second quarter last year, it was – my number was a little different on the actual. It looks like you did some reclassification. So, I'm guessing that that had some sort of a negative impact on last year's margin number. Is there a way to get an idea of what this quarter's margin would have been kind of in the old segmentation, only so that we can kind of think about apples-to-apples relative to our models? R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: Yeah – no, I think if you remember back in the first quarter, we'd mentioned that, we had moved around some business units for reporting purposes, and we restated. So, yeah, we don't have the ability to go back now and tell you what it was on the previous, because everybody is in the new framework. Michael Nannizzi - Goldman Sachs & Co.: Any of those expected to happen or anticipated from this point forward this year or is that mostly done? R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: Not that we know of. I mean we would only do mid-year restatements, if something was – or reclassifications, if something was really material. And most of those were driven, if you remember, with the Acumen and Axiom disposals last year that allowed for some alignment of some businesses tighter in – across some of the divisions, but – no, don't see anything for the back end of the year. Michael Nannizzi - Goldman Sachs & Co.: Got it, Okay. And then just in terms of, you mentioned some expenses on the benefit side that you expect as you kind of anticipate, make more investments for – hopefully for growth and margin expansion that's coming. I also remember you guys had talked about at some point, some potential expenses on or investments on the system side. Is there a way for us to sort of quantify, just during this investment phase, a) like how long do we expect the investments part to overcome the sort of revenue piece and to be able to quantify, what that might be in terms of the headwind to margins? J. Powell Brown - President, Chief Executive Officer & Director: So, Michael, this is Powell. Michael Nannizzi - Goldman Sachs & Co.: Hi, Powell. J. Powell Brown - President, Chief Executive Officer & Director: A couple of things. Number one, good morning. Michael Nannizzi - Goldman Sachs & Co.: Good morning. J. Powell Brown - President, Chief Executive Officer & Director: Let me hit the second question first and add it into the first response. Number one, we continue to evaluate the technology investments, and I believe that in the near to intermediate term, probably in the next six months to nine months, they will be able to give better clarity about how that's going to play out. So, we're not there yet on that, but we're getting close, that's number one. As it relates to the level of investment, what I want to say, and this is not going to answer your question exactly, but we always are doing a certain level of investment. As you know, we've talked about that in the past. We allocated a portion of our revenues each year to support the recruiting of people that aren't already in our budgets at a local level. That's number one and what we've done and tried to articulate to everyone in the last couple of quarter is there have been some opportunities for us to invest in people, some of them are already in the business, they have revenue producing capabilities right out of the box and some who are just very talented from other industries that we have to teach insurance to. So you've got the revenue production investment and then you've got the additional resource investment as it relates to employee benefits. We're very keenly focused on trying to grow as you know each and every segment of our business and you heard Andy say that the under 100 declined in Q2. And so we're trying to, number one, keep ahead of and provide the right solutions for our customers for that segment, all the benefits for that matter, but it will have some modest investment expenses, but we're not going to talk specifics about that in the next couple of quarters. R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: Yes, just, if you would, Michael, our comment inside there about the next few quarters, so we're not saying couple, we're not saying years, so just to kind of give you some parameters around there. And the reason why we think it's going to put a little bit of pressure, at least some downward pressure on margins in the backend of the year, I think as we've mentioned during some of our meetings, it generally takes two years to three years and sometimes four years to get some of the newer producers up and on a positive basis with their book and everything. So that's just kind of normal run rate. But, don't take any of this and we mentioned this in the comments that we're backing off on the range that we set on our long-term margins. We said we're very comfortable at 33% to 35%. We mentioned this last year on the second quarter. We're going to kind of bump around by quarters every now and then. It's okay, it's nothing that we're getting all anxious about. We think 33% to 35% is a really good margins for the company, we're very comfortable at that range. Michael Nannizzi - Goldman Sachs & Co.: Great. Thank you.

We'll take our next question from Elyse Greenspan from Wells Fargo.

Hi, yes, just a few questions. But first, I wanted to spend a little bit more time on the organic growth within the Retail segment in the quarter. I know you guys pointed out that change and more discretion in Washington and then also some of the downward trends within the employee benefits, both especially with the small businesses. I'm just – it seems like some of that was also creeping up in the first quarter as well. So, I just warrant anymore information you can give us on what kind of drove the sequential downward trend within that Retail organic growth. And then just thinking out, I guess for the balance of this year, just directionally, I guess, do you expect kind of where we're sitting today, would you expect the retail organic growth to improve from what we saw in the second quarter? J. Powell Brown - President, Chief Executive Officer & Director: Okay. So, Elyse, the first thing about the impact of Washington, I think, we laid out pretty clearly, it was a $1 million impact in Q1, it was $1.2 million in Q2 and we believe that it will be a $1 million impact in Q3 and Q4. As it relates to other than what generally occurring in Retail, I would tell you the two things that kind of were a draw or a negative draw on Retail this particular quarter, one, as you heard us say cat property rates are down 10% to 25%, that's a small portion of it. And, we had some loss business, and so you heard me talk about couple offices in the first quarter that were underperforming. And we continue to work on those underperforming offices, one quarter does not fix something. This is a multi-quarter strategy. So, I have said, and we have said that we believe that our business in Retail is a low to mid single-digit organic growth business. And so that's something that we're working very actively on growing more than it was this quarter and more than it was in the first quarter.

Okay, great. And then back to just some comments that you guys made on the margins in terms of also you pointed to investments and I guess, the overall – I guess, in terms of seeing potential margin deterioration, it seems like in the next few quarters. So I'd assume that that's a comment, I guess, specifically to the overall company and then also within the Retail segment. So you're thinking as we're thinking of our models that we'll probably see your margins deteriorate, I guess, until Q1 in 2016, just any more info in terms of directional there on the margin side? R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: No, no other direction, probably, Elyse, other than your comments that you made there with it. We're very, very positive about everything that's going on inside of the business. We see great activity in all the core areas of what we know that's going to drive long-term growth and profitability force, sometimes it doesn't happen in the immediate quarter. We'd all like to add that one that we can put over the top, it doesn't work that way, but everything is looking positive on the activities and that's why we feel really good about the business and it will come back in the appropriate timeframe.

Okay. And then in terms of continued commissions, those were a bit higher this quarter, but you'd pointed to seeing the continued slowdown in the back half of the year, has anything changed on that front? R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: No, nothing from our previous comments. I said, we picked up a little bit in programs in the second quarter. We do expect the fourth quarter to be down, so again just make sure everyone is captured that in their models and that will primarily be in programs related to our force-place business. Again we've got advance notice from Lloyd's that we will be down year-over-year so – and their ranges are still what we previously communicated.

Okay. And then lastly, do you have the share count on the diluted share count at the end of the quarter? R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: Yeah, hold on one second, we'll give you – it's just a little over $143 million. Remember, we have the two-step methodology, Elyse. So if you look on our face, it's going to show the $139 million in there, but if you (40:45) we've got to allocate revenue or income to the participating shares. So, just a little over $143 million.

Okay. Perfect. Thank you very much.

We'll take our next questions from Charles Sebaski from BMO Capital Markets.

Good morning. J. Powell Brown - President, Chief Executive Officer & Director: Good morning.

Couple of questions. I guess, first, I'd like to hoping to get better understand the investments in people and I guess one sort of how many people you're talking about. And two, I mean, I guess my understanding of how the business works is that there is continual churn in the business, producers come and go, you're hiring, people leave, et cetera. I guess what is different now that we're kind of getting a itemized, hey, there is a margin impact due to hiring? Is this seasoned veterans, is there's an increase in the development of young talent? What is change, where we're seeing this in the margin where we might not have seen this in the margin in years past? J. Powell Brown - President, Chief Executive Officer & Director: Okay. So as you know, we have historically and continue to hire people from other industries that we believe can be successful in our business and we teach them insurance. So in your vernacular, I think, development of new talent is the predominant investments that we're talking about. And so we do that all the time, but we're doing more of it right now. You made a comment about the number of seasoned people, and we do do that on a sporadic or limited basis when we find very talented people that we think can fit culturally in our system. So we have made some of those investments as well. You've heard me make that comment in quarters past, specifically around Beecher Carlson, but it is not exclusive to Beecher Carlson, it is across the entire platform. And so, we have been sort of signaling this over the last several quarters that we are continuing to invest in our platform. And when I say invest, you might say, we are over-investing now relative to the historic levels. And so that is out of need, that is out of opportunity, that is out of – we think, there is – there are some people that are and will become available that will be potential good additions to our team. So I don't think, Charles, this is new, but it is new in the sense that we're saying that we are investing more in people, we are actually doing both steps, which is new talent, new to the industry and existing talent that fits culturally, and there are some opportunistic investments that we have made and we'll continue to make in people or groups of people in the near to intermediate term. R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: Charles, I'd like to mention, I mean, if you go back to where we're kind of standing a year ago...

Yeah. R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: ...we had almost this exact conversation when we talked about some of our investments. And one of the things that we communicated and committed to a year ago is that we would help provide you guys with more insight, that's what we're doing right now. So again this is just kind of a building story along through all of it in order to get there.

I guess what I'm curious about is, Powell, the opportunistic side versus the run rate. I guess what's going on and you talk about the acceleration and investment in people through need of the business, I guess the question is, why is this going to seize? So, why are we going to go to two quarters down and in the first half of 2016, the need to invest in the business and development of talent is going to somehow come back into line with where it was before and margins? I guess in the continuation, a continual flow of new investment as the business grows, it would seem that you're talking about it getting back to what it was and that would mean a slowdown in the investment come next year and I guess why is that versus today that's what I'm – I guess I'm somewhat challenged with? J. Powell Brown - President, Chief Executive Officer & Director: Okay. So, like I said, we have a system that we don't talk a lot about relative to the people, because everybody does their investments differently and we think we're different. But we have ramped up our intern program, we're hiring more people off college campuses today and there are a component of opportunistic investments. So you were correct in saying that a certain level of this will always go on. That is correct. You're right. But I will tell you that today and in the future, if the right opportunities present themselves, we will make opportunistic investments in our business. So what you might be thinking is this. Let's call it what it is. There are a lot of acquirers out there, some of whom are paying what we might consider ridiculous prices in certain transactions. We are considering making investments in people, where there isn't any so-called acquisition, but bringing those capabilities and talents on to our team that is a short-term margin hit until the revenue comes with them. And so, you are correct in saying that there will continue to be an ongoing expense. But I can assure you that there are components to these investments, which are opportunistic and we will continue to explore those when we're in an environment, where acquisition pricing is up and we want to get more talent on our team in certain areas to serve our client base.

Okay. And finally, can I just ask about the size of the buyback authorization. I guess relative to the $200 million one you did last year with the ASR still going on and as you said, there's limitations on due to volume or volatility and how that can be executed, but if I think of the ASR that started in March and it's going to go through August, so you're talking about a six-month, five-month, six-month, seven-month timeframe, why $400 million? I guess if I look at the $200 million and the timeline it took, it seems to be – if I look at that just trajectory pretty long into the future and just guess any additional thoughts on the concept of where that number came to relative to cash flow or market cap or flow? J. Powell Brown - President, Chief Executive Officer & Director: Okay. So as you know, we have $50 million of the authorization outstanding, which actually expires on December 31 of this year. And the $400 million does not have an expiration date. And so, when I spoke to the board about what we want to do, I asked for a larger authorization, which would give us more of a window to invest over time and to continue to look at it on a case by case basis as we make investments, whether we do acquisitions, whether we invest internally or whether we buy it back. There was not a – I mean, there was a discussion around free cash and market cap and all that. But basically what it was is we bought – at that particular authorization, $150 million in a year and if we got $400 million, we believe they gave us a multi-year, potentially, ability to buy our stock back, if we think it is the right time to do it. R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: And Charles, I mean just, again, maybe keep in mind the $200 million that was approved last year, it was the only buyback in our history, it's the first time that the company has approved and it was executed on one. So it was an initial step and that's why, there were some parameters put around that one. Now, as Powell mentioned, we want to have the flexibility as an organization not be constrained on a specific time period, and to be able to utilize this as part of our capital allocation. Not uncommon for most companies to have an authorization at that percentage of market cap. You can go out and look at some of our peers that are out there. They're not far off on the numbers as well as other companies. So pretty common, what we've done.

Okay. I appreciate all the color. Thanks, guys. J. Powell Brown - President, Chief Executive Officer & Director: Thanks, Charles.

We'll take our next question from Josh Shanker from Deutsche Bank.

Yeah. Good morning everyone. J. Powell Brown - President, Chief Executive Officer & Director: Good morning.

My first question – good morning. My first question, I was wondering if you could talk about growth as it relates to retention by segment, it's a very competitive market always, have the competitive dynamics changed? Are you retaining more business than you have in the past in each of the segments? Are you writing more gross new business and retaining – I guess what's the math behind the retention versus churn sort of dynamics that's putting together these numbers right now? J. Powell Brown - President, Chief Executive Officer & Director: Okay. So, what I would, on a macro level, say that there are some businesses that are impacting or drawing down on that for several reasons, depending on the actual segment itself. So let's talk about retail for a moment. We continue to write a lot of new business, but as I referenced last quarter and this quarter as well, there are several offices that have underperformed. And in those underperformance, typically what you find is, there is a higher loss business in those offices than elsewhere. So an example that we've talked specifically about would be in the State of Washington with the health plans. Now that was an action in the state, but still that's an inordinately high amount of loss business in that particular business unit this year. Is there an opportunity to get some of that back in the future? Maybe. But that was a decision made at a local or statewide basis. If you think inside of Wholesale for a moment, you have the biggest impact in Wholesale is the downward pressure on catastrophic property rates. And so, Wholesale has performed very, very well, not only this quarter, but this year and last year and grown even in the face of some of that early downward pressure, but as that pressure mounts, it is harder to grow that large property business. The impact on binding authority is slightly less, but there are still downward rate pressure on binding authority business. They have done a really good job of the retention of their account and writing a lot of new business. Inside of Programs, you're going to have certain businesses that are involved with catastrophic property that have had a negative impact right out of the box. So remember, you have one carrier partner we're working with. We're trying to underwrite over a long period of time to a profitable loss ratio and you have a number of other standalone or E&S markets come in and undercut that pricing, which if we keep it, it's down dramatically or if we don't, it is we lose the entire account. Also Andy referenced the workers' compensation change in appetite. So it's not uncommon in certain instances in some of our programs, where if they've had the carrier partners had a little bit of a hiccup or doesn't like to see the development that they're seeing, they may change the underwriting guidelines slightly and that would impact our ability to renew some of the existing business and write new business in that segment. Whatever that is, it's not necessarily workers' compensation, it could be any class of business that we write on a programs basis. So what I would tell you is, it's a combination of, one, rate pressure in some instances; two, loss business in a couple of offices, some of that is not as much as Retail, but in Programs and in Wholesale; and three, the general stake of the environment, which is in the middle market, it is all right, and it's kind of bumping along, but we're not seeing a lot of people adding a lot of lives or the exposure unit growth is not significant across the country, across all segments. So, that's how I'd answer your question.

Okay. And in the other income segment on the P&L, it's small but in the past, we've spoken about and it was going to get a much smaller and then, there is little surprise, it looks like it did in previous quarters this quarter, is that anomaly now or should we expect other income to be smaller in the future? R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: Yeah so, I think, Josh, we talked about this on previous calls. And starting this year what we assuming – starting in the fourth quarter of last year, we started reporting the gains, losses on sales of businesses down in the expense section to get rid of that noise out of revenue. All that was – should sit up inside of other income now going forward as if we have legal settlements or some sort of judgments, the number should be pretty small in nature. We had a settlement this quarter. So, again, that probably not be an area that you want to, I think everybody seems to do this, they put $1 million, $1.5 million, $2 million in there, that one is going to float up and down, it could be zero sometimes.

Okay. And do you feel this quarter is higher than average? I mean, I'm not putting average number in there it's all I can do is that do you think this quarter – I think $1 million in average or do you have any thought on that? R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: This quarter would be probably higher than normal because of the judgment that we had.

Okay. Thank you very much.

We'll take our next question from Meyer Shields from KBW. Meyer Shields - Keefe, Bruyette & Woods, Inc.: Thanks. Good morning. J. Powell Brown - President, Chief Executive Officer & Director: Good morning. R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: Good morning. Meyer Shields - Keefe, Bruyette & Woods, Inc.: Could you talk a little bit about how – when you've got – looking at the National Programs segment, you talked about the change in carrier appetite for California workers' compensation. What's your process here for responding to that, finding another carrier or whatever? J. Powell Brown - President, Chief Executive Officer & Director: Well, we have multiple carriers that we've work with. And so, some – the – what I'm referring to you specifically is one of the larger carriers and some of the other carriers maybe able to pick up some of that. And we're constantly talking with our carrier partners to make sure that we have, to the extent possible, some overlap in some of the programs that have multiple carrier partners. And so, as I said, this is – we just used that as an example which is true that it was impacted in workers' compensation, but it could be the same in another programs as well. So we're always trying to work with our carrier partners to, one, make sure that it can be a profitable program for them over the long-term and that we can continue to write the amount of new business that we want to and retain the business we want to grow our business organically in line with what we want and what they want. Meyer Shields - Keefe, Bruyette & Woods, Inc.: Should we expect the shortfall in the quarter to then be made up when you find another carrier that's going to write this business? J. Powell Brown - President, Chief Executive Officer & Director: Well, once again, I would tell you that, that's assuming everything else is in sort of a steady state environment and so, as I've said in other programs, other than that workers' compensation, we have significant downward pressure on coastal property, for example. And so, if in fact, you had the uptick in workers' comp, which you could have, but you could have more pressure on coastal property, which means that would not be an offset, it depends on the aggregate. And so if you isolate it in one program, which we have, as you know, over 35 programs, that I think it could be correct, but I think it's not a correct statement, when you have multiple programs like we do and so you could have other things happening in other programs simultaneously. R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: Yeah, Meyer, and we kind of – because of the – we can have these ups and downs by the quarters, we also kind of looked at where are we at the half year, where are we on a trailing 12 months for Programs. And that gives us a better feel for trend on the business and we don't see the second quarter is actual the trend. So kind of look back over the history, that gives a better perspective of kind of at least our outlook on things. J. Powell Brown - President, Chief Executive Officer & Director: And to that point, Meyer, there is – Andy called out in the deck, that the impact of the couple of those programs this quarter was just under 200 basis points. Meyer Shields - Keefe, Bruyette & Woods, Inc.: Right. J. Powell Brown - President, Chief Executive Officer & Director: Some of that could change in Q3, but I would tell you that the coastal property pressure, we believe, is going to continue, at least for the foreseeable future. Meyer Shields - Keefe, Bruyette & Woods, Inc.: Okay. Great. Thank you very much.

And we'll go next to Ryan Byrnes from Janney.

Thanks. Good morning, guys. J. Powell Brown - President, Chief Executive Officer & Director: Good morning.

I just want to add a question on Wright. Obviously, as we get to wind season here, I just wanted to – I know, you guys have given the average kind of revenue associated to catastrophes the last 10 years, but that excludes two big years, wanted to get an idea as to how big Wright's revenues were with Katrina and Sandy, just sort of to get a – just a piece of – just to have an idea of what could happen there? R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: Yeah. Maybe probably, Ryan, the way to think about that one is think about the $7.5 million incremental, that's off of those storms, because again those two storms were historic in nature, right? And so, if you go back, and again, this kind of gives a perspective and a lot of people say, wow, there should be a lot of revenue coming out of Texas. We made the comment that it was immaterial for us for the quarter. We ended up with a few – probably, in Wright, it was just a little over 3,000 claims in total for all of the storms, so it wasn't much. If you go back and you look at Sandy, we had over 20,000 claims. So these are, I mean, we are at very, very low levels right now. So unless there was a major storm or storms come through at that level, we continue to expect very low revenues in this arena. J. Powell Brown - President, Chief Executive Officer & Director: And to specifically address your question, Ryan, we don't have that right here in front of us. We could get it, but we don't have that right here in front of us relative to the – but it is substantially higher than that.

So, it will be a 2X of the average or – I'm just trying to get a ballpark. I mean I realized (01:02:58) the right way to think about it – it'd be a multiple of... J. Powell Brown - President, Chief Executive Officer & Director: I don't think it's a multiple of, but I don't think you can just say 2X, because every event is different, obviously. So I think that's kind of you're walking a tightrope on that one. But I would say, it is materially more and it could be 1X, 2X, 3X. It could depending on the size and the complexity and the devastation of the storm. R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: Yeah, Ryan, we're not trying to be cagey you on this one. I think we want to go back though and give you guys projections on previous storms for going forward, just because of all the variables inside of them.

Yeah, sure. Just help to see how much they could grow? And then my second question, my last question is, can you guys just maybe walk me through the thought process that you guys go through when you think about doing buyback versus doing a deal? Let's say, you have the opportunity to do a deal, let's say, again more expensive now, let's say anywhere from 10 times to 11 times EV to EBITDA and then compare that to buying your stock at I don't know 9 times, 9.5 times, how do you guys, if you have those two options, can you maybe just walk us through how you evaluate that? J. Powell Brown - President, Chief Executive Officer & Director: Okay. So, obviously there is a financial consideration of which you did some very basic math right there that would be part of it, number one. Number two, it would be – the second thing would be the capabilities and the talent of the team. And so, you have seen us make larger acquisitions announced at 10 times EBITDA that was slightly more than what we were trading at, at the time and we believe – and so we felt at the time that the capabilities that the group presented made sense for us to make that acquisition. And so we weigh the talent, the capability, the specialization, if there is a segment that we're trying to expand or get into, if it's a capability that we're trying to enhance that we have but make better or we don't have on the team, all of those are put in our considerations. We look at a number of financial metrics back in part one and that could be anything from return on invested capital to internal rates of return to margins, growth, et cetera, et cetera, et cetera; organic growth on their part, all kinds of things; profitability over a period of time; and so, we continue to do that. And so, we think that, as I've said in the current marketplace for acquisitions, it is competitive and as you say, the multiples are up. And so, at face value, if you are just doing a financial calculation based on what you just said, then you might say, well, you might buy some stock, and that is part of the – part of the evaluation, but you have to look real closely at each one of those acquisitions and see how they will help us not only now but in the future. R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: Yeah, Ryan, and if you look at this year, a great example of we're doing both. And Powell mentioned in his comments as we can still acquire good businesses, if we got the cultural fit in place and we can come up with the right financial transaction. We've acquired seven businesses over $30 million this year. We've also bought back some shares. So this is, when we talk about our capital allocation methodology and the disciplined nature to it, this is where we try to balance across all of these and sometimes we'll be doing more of one or less. Sometimes, we'll do both at the same time. But, our goal was we're trying to drive shareholder returns. J. Powell Brown - President, Chief Executive Officer & Director: And we want the option to do all three. R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: Exactly. J. Powell Brown - President, Chief Executive Officer & Director: So that, like I said, what we've tried to do is give ourselves options. And so, we believe that we have that now. We did that through working on our capital structure last year. We've done that through our share repurchases, year-to-date. We've done that through the authorization of $400 million. But all along, we continue to invest in our business and are looking for additional acquisitions.

Okay. Great. Thanks for the color, guys. J. Powell Brown - President, Chief Executive Officer & Director: Thanks, Ryan. R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: Thank you.

And we'll take our next question from Adam Klauber from William Blair. Adam Klauber - William Blair & Co. LLC: Oh, thanks. Good morning everyone. J. Powell Brown - President, Chief Executive Officer & Director: Good morning, Adam. Adam Klauber - William Blair & Co. LLC: Couple of the questions, what's the organic rate running at and did rate help the program margin during the quarter? J. Powell Brown - President, Chief Executive Officer & Director: See, so let me go back on, so on the margins itself for the quarter is, yes it did have – I'll answer the second one first and then come back to it, is it did have a benefit or as that (01:08:47) we know that business itself has a little bit of seasonality to the profitability a little bit, but total rate, as we disclosed previously and has it's been running, is up in the 30% margin business and again it flows back and forth, anywhere it can go from a 36% to 32% in that ballpark. Second quarter generally a little bit higher and third quarter a little bit higher and... Adam Klauber - William Blair & Co. LLC: Okay. J. Powell Brown - President, Chief Executive Officer & Director: ...in that business, so some benefit inside of there. Adam Klauber - William Blair & Co. LLC: Okay. J. Powell Brown - President, Chief Executive Officer & Director: But again, we try to look at it over the full year based upon its cost base inside of there. Adam Klauber - William Blair & Co. LLC: Sure. J. Powell Brown - President, Chief Executive Officer & Director: And then, overall business is performing well. We talked about our new programs that we have inside of there within schools, foods and new National Program. When we look at flood itself, on it, Adam, is one of the things that we try to do to figure out how we're doing and how we're performing in the marketplace is we look at our total policies in effect, and we look at that as a percentage of all of those written by FEMA and what we've seen over the last year is that our percentage of the total is continuing to increase. So with that we feel like the business is performing really well at this stage. Adam Klauber - William Blair & Co. LLC: Okay. Great. That's helpful, and then finally at Wholesale, clearly that's being impacted by the negative property. Wholesale, you typically have that accordion where business flows back and forth between the standard and the E&S market. Where are we in that accordion right now? J. Powell Brown - President, Chief Executive Officer & Director: Yeah. I think that the accordion would be twofold. I think from a liability standpoint, I think that it's probably some of those that were viewed as E&S potential accounts are being seriously considered by standard markets, but that's on liability not property. On property, I believe it's – the way I would describe is, it's a little bit like a free for all. I call it like the battle royal in wrestling, and so you have a bunch of people and they're wrestling for accounts and then periodically, you have one or two or three new wrestlers come in and get into the ring. And so that adds to the excitement, it also adds to the chaos and driving market rates down. So and some of those newer players have very big balance sheets. So, I think that the property space will continue, and E&S will continue to be E&S-centric, you're kind of you're E&S or you're not E&S for the most part. But on liability and some of the others, as the market continues to shift, the carriers are looking for areas to grow their business, liability in Wholesale maybe one of those. Adam Klauber - William Blair & Co. LLC: Okay. That's very helpful. Thank you. J. Powell Brown - President, Chief Executive Officer & Director: Thanks.

And we'll go next to Ken Billingsley from Compass Point. Ken G. Billingsley - Compass Point Research & Trading LLC: Good morning. I just wanted to clarify a couple of answers you had before, so it's just like a follow-up. One of those was on the workers' comp partner... J. Powell Brown - President, Chief Executive Officer & Director: Can you speak up, Ken, you're sounding really faint, sorry. Ken G. Billingsley - Compass Point Research & Trading LLC: Is that better? J. Powell Brown - President, Chief Executive Officer & Director: Yeah. You sound better. It's much better. Thank you. Ken G. Billingsley - Compass Point Research & Trading LLC: All right. So I just wanted to ask some kind of clarification questions on some comments from earlier. I know this is only one of many things you mentioned, but on the workers' comp appetite declining for that one partner, what were they seeing specifically, was it an internal issue or external issues that's causing them to back away? J. Powell Brown - President, Chief Executive Officer & Director: Yeah. I would say, I think that they saw something in a market, which was limited to a certain geographic area. And yet the filing they had didn't allow them – after they did a loss analysis in that area, the filing with the state did not allow them to address it on a geographic basis, it had to be more of a state basis. So you have that – I think that's maybe more than you wanted to know, but I would consider it a little bit of both, if that makes sense. And so, if you had a different filing, if they had had a different filing, I think they could have dealt with it differently. So, like I said, those are things that you work through with your carrier partners and we work through with them. Ken G. Billingsley - Compass Point Research & Trading LLC: So it's likely that they would return or want to do more once they can get their filing in order? J. Powell Brown - President, Chief Executive Officer & Director: Well, that would be what I would like it to be and we'd like. I can't answer that, because I don't have that information right here with me today. I know that we are talking to them and/or our other carrier partners about the ability to write that class of business in question. So, like I said, maybe it's more information than you want, but in the Program business, if you think about it, we are an outsourced insurance company, as you know. And in doing so, we work with our partners very closely to make sure we have the right filings. In some states, that's very easy, and some states that's more complicated. And so, file and use versus an approval versus all kinds of different variations. And so, we try to work with them the best we can and then we're presented with a challenge or an opportunity with this either try to work with them and get it in a position with a new filing that'll works for them, I don't know if they will do yet or not. We don't know that, or is there another carrier partner that works with us that will be able to take up some of that. Ken G. Billingsley - Compass Point Research & Trading LLC: Okay. Then on the stock buyback, on the $100 million accelerated stock repurchase that you mentioned in the press release, is this in reference to the prior one or is this going to be a new $100 million ASR? R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: Yeah. No, Ken, it's relates to the one that we announced back in beginning of March. Ken G. Billingsley - Compass Point Research & Trading LLC: Okay. R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: And that was, again just for sequence on this, we did initially a $50 million on the initial $200 million, then we did the $100 million in March and that leaves us with $50 million on that $200 million. And that's what we mentioned that – the $100 million we just did should be completed here end of July, sometime in mid-August. J. Powell Brown - President, Chief Executive Officer & Director: And the reason it's not done is not because we don't want it done, it's because we can't buy in the open market, it can't buy that in, because of the trading volume. Ken G. Billingsley - Compass Point Research & Trading LLC: Right, correct. R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: Yeah, and it's just – because we're underneath of an ASR, in this case, we've got JPMorgan as our agent on this and it's up to them to manage what they buy in the marketplace off of volatility and how they can purchase versus the VWAP or volume weighted average price. So it's really up to them, we don't actually direct the day-to-day buying. So, our goal is hopefully, we're going have it done by June, but we didn't, but that's all right. Couple of weeks is nothing significant in grand scheme of things. Ken G. Billingsley - Compass Point Research & Trading LLC: Okay. And the last question was a – it's – again, it's a follow-up on the M&A side. And I might have missed this, but normally when we listen to these calls, everyone talks about the robust pipeline of M&A activity and maybe I missed that comment. But can you talk about if there's any change or shift in kind of attitudes towards that? I know you mentioned that's more competitive and multiples were up. But could you talk about maybe why you're not as robust maybe with the pipeline expectations? And then where is that competition coming from, is it coming from the private side, public side, is it private equity? J. Powell Brown - President, Chief Executive Officer & Director: Yeah. I would say that the biggest participant in this is private equity. And so, Ken, if you go back to 2006, as an example, 29% of all transactions announced were done by financial institutions, banks. And only 4% were done by private equity firms. In there, you have a big group of the public buyers and you have some private buyers. But in 2013 and 2014, private equity was 44% and 43% of the announced transactions. And in that same period, banks were only 8% and 5% of the transactions, while the publicly-traded brokers, the percentage in the 20%s which has remained fairly confident over the entire period of time. So we're starting to see private equity buy private equity, which I think is many times an indication of a frothy environment. And so – but there are other publicly-traded firms that you know that are announcing transactions and there are some private firms, but it's predominantly private equity. We are always talking to people out there always. And as I've said before, how and when or why and when they sell is different and unique to each one. We would tell you and quite honestly, the reason that we did not make that comment at this time is because the pricing continues to be very competitive. It's not that there aren't a number of transactions out there. There are actually a lot of transactions and there's a lot of activity because of the speculation of these high or higher multiples. But we are going to continue to stick to our knitting, which is we are trying to execute better every day. We want to sell more accounts and we want to retain the existing clients that we have. We want to work really closely with our carrier partners, which enable us to have additional success, investing in our teammates all along the way and driving long-term shareholder returns for our stockholders. Ken G. Billingsley - Compass Point Research & Trading LLC: And then, the last question I have that relates to that is, so looking if it's the higher multiples being paid, regardless of who's doing that, what is different in that business model that paying a higher multiple makes sense, given the current market conditions and where organic growth prospects are likely to be over the next 18 months to 24 months? J. Powell Brown - President, Chief Executive Officer & Director: Okay. So as you know, there can be a pro forma. And sometimes, there is a pro forma of a pro forma. And anybody can make any pro forma, make any number look good or potentially good. And some people are willing to accept lower returns than others. And so, if you were in a, for example, private equity firm and you were expecting a 20% IRR and on the pro forma of the pro forma as best we can see, if it couldn't be higher than 14% or 15% or 16%, then that's just a decision that they've made. As it relates to – some people maybe don't look at their return on invested capital as closely and maybe they do. But sometimes people bake in and calculate synergies from existing businesses that they already have, which might make a pro forma look a little differently or maybe a little rosier. And so, everybody does it differently. And since I haven't worked at those other firms, I don't know exactly, I can only speculate. But I can tell you that we put our performance together, we feel comfortable with our performance. And as I like to say, it's a multiple of what. I've had several people asked me that some people may be saying, they're paying 7 times. And I say is that 7 times revenue, is that 7 times a pro forma of 2018 earnings, is it 7 times of what? So, I don't think it's so much the multiple number it is, what is – what are the earnings that they're calculating and that's where I think sometimes there is a divergence in that discussion. So it's very interesting, it sometimes is challenging, sometimes comical, but we keep going and different people are going to make – typically people buy emotionally and justify it intellectually, so they will go where they think that they will be best served unless the number is so unusual and if nobody else can get to it. So it's a very people oriented business as you know and we continue to talk to all of these people to try to set ourselves up for the opportunity to acquire them if that's – when and if that opportunity presents itself. R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: Ken, (01:23:22) and when we look at this space, lot of the really high multiples are – appears to be the really high multiples being paid by the private equity side, as Powell mentioned. There – their strategy is there is an exit to it, right, that means there is a liquidity event at some point in the future Ken G. Billingsley - Compass Point Research & Trading LLC: Right. R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: And so that helps them quite often drive the returns and if you're someone like ourselves as a strategic buyer, we've got to make sure that we're going to get the appropriate returns over time because we don't have a liquidity event on, we're planning on buying the asset and holding it for a really long time, having it part of our team that's out there. So it's just a different philosophy maybe as to how each company thinks about returns inside of it. Ken G. Billingsley - Compass Point Research & Trading LLC: Great. I appreciate you're taking my questions. Thank you. R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: Sure. J. Powell Brown - President, Chief Executive Officer & Director: Thank you.

That concludes today's question-and-answer session. I'd like to turn the conference back to our moderators for any closing or additional remarks. J. Powell Brown - President, Chief Executive Officer & Director: All right. Thank you, Tracy, and thank you all for your time today. We look forward to talking to you at the end of Q3 as we continue to work on our opportunities and our challenges and thank you. If you have additional questions, I know Andy will be reachable throughout the day. Thank you.

This concludes today's conference. We thank you for your participation. You may now disconnect.